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Regular Session, 2014
SENATE BILL NO. 442
BY SENATOR MARTINY
MUNICIPALITIES. Provides relative to investments by political subdivisions. (8/1/14)
AN ACT1
To amend and reenact R.S. 33:2955(A)(1)(j)(iii) and (k)(ii) and to enact R.S. 33:29552
(A)(1)(l), relative to investments by political subdivisions; to provide for bonds,3
debentures, notes, or other evidence of indebtedness; to provide for a time period;4
to provide for an effective date; and to provide for related matters.5
Be it enacted by the Legislature of Louisiana:6
Section 1. R.S. 33:2955(A)(1)(j)(iii) and (k)(ii) are hereby amended and reenacted7
and R.S. 33:2955(A)(1)(l) is hereby enacted to read as follows:8
ยง2955. Investments by political subdivisions9
A.(1) All municipalities, parishes, school boards, and any other political10
subdivisions of the state are hereby authorized and directed to invest such monies in11
any general fund or special fund of the political subdivision, and any other funds12
under the control of the political subdivision which they, in their discretion, may13
determine to be available for investment in any of the following obligations:14
* * *15
(j) Bonds, debentures, notes, or other evidence of indebtedness issued by the16
state of Louisiana or any of its political subdivisions provided that all of the17 SB NO. 442
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following conditions are met:1
* * *2
(iii) The indebtedness has a final maturity, mandatory tender, or a continuing3
optional tender of no more than three five years, except that such three five-year4
limitation shall not apply to either of the following:5
(aa) funds Funds held by a trustee, escrow agent, paying agent, or other third6
party custodian in connection with a bond issue or.7
(bb) investment Investment of funds held by either a hospital service district,8
a governmental 501(c)(3), or a public trust authority.9
(k) Bonds, debentures, notes, or other indebtedness issued by a state of the10
United States of America other than Louisiana or any such state's political11
subdivisions provided that all of the following conditions are met:12
* * *13
(ii) The indebtedness has a final maturity, mandatory tender, or a continuing14
optional tender of no more than three five years, except that such three five-year15
limitation shall not apply to funds held by a trustee, escrow agent, paying agent, or16
other third-party custodian in connection with a bond issue nor to investment of17
funds held by either a hospital service district, a governmental 501(c)(3)18
organization, or a public trust authority.19
* * *20
(l) Bonds, debentures, notes, or other indebtedness issued by domestic21
United States corporations provided that all of the following conditions are met:22
(i) The indebtedness shall have a long-term rating of Aa3 or higher by23
Moody's Investors Service, a long-term rating of AA- or higher by Standard &24
Poor's, or a long-term rating of AA- or higher by Fitch, Inc.25
(ii) The indebtedness has a final maturity, mandatory tender, or a26
continuing optional tender of no more than five years.27
(iii) Prior to purchase of any such indebtedness and at all times during28
which such indebtedness is owned, the purchasing Louisiana political29 SB NO. 442
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subdivision retains the services of an investment advisor registered with the1
United States Securities and Exchange Commission.2
* * *3
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Michael Bell.
DIGEST
Martiny (SB 442)
Present law provides that bonds, debentures, notes, or other evidence of indebtedness issued
by the state of Louisiana or any of its political subdivisions has a final maturity, mandatory
tender, or a continuing optional tender of no more than three years, except that such three-
year limitation shall not apply to funds held by a trustee, escrow agent, paying agent, or
other third party custodian in connection with a bond issue or investment of funds held by
either a hospital service district, a governmental 501(c)(3), or a public trust authority.
Proposed law retains present law and changes the final maturity, mandatory tender, or a
continuing optional tender from three years to five years for bonds, debentures, notes, or
other evidence of indebtedness issued by the state of Louisiana or any of its political
subdivisions.
Present law provides that bonds, debentures, notes, or other indebtedness issued by a state
of the United States of America other than Louisiana or any such state's political
subdivisions has a final maturity, mandatory tender, or a continuing optional tender of no
more than three years, except that such three-year limitation shall not apply to funds held by
a trustee, escrow agent, paying agent, or other third party custodian in connection with a
bond issue or investment of funds held by either a hospital service district, a governmental
501(c)(3), or a public trust authority.
Proposed law retains present law and changes the final maturity, mandatory tender, or a
continuing optional tender from three years to five years for bonds, debentures, notes, or
other indebtedness issued by a state of the United States of America other than Louisiana or
any such state's political subdivisions.
Proposed law provides that bonds, debentures, notes, or other evidence of indebtedness
issued by domestic United States corporations shall have a long-term rating of Aa3 or higher
by Moody's Investors Service, a long-term rating of AA- or higher by Standard & Poor's or
a long-term rating of AA- or higher by Fitch, Inc. and that the indebtedness has a final
maturity, mandatory tender, or a continuing optional tender of no more than five years.
Proposed law requires that prior to purchase of any such indebtedness and at all times during
which such indebtedness is owned, the purchasing Louisiana political subdivision retains the
services of an investment advisor registered with the United States Securities and Exchange
Commission.
Effective August 1, 2014.
(Amends R.S. 33:2955 (A)(1)(j)(iii) and (k)(ii); adds (A)(1)(l))